By using new markets, developing innovative platforms or offering different uses that enhance the value of existing products, online payment providers will focus on finding new ways of development in 2017
Online payments are increasingly integrated seamlessly into everyday life. In the current year, payment companies will actively develop, which are looking for ways to attract new users, stimulate their participation and create a habit of use and loyalty to the brand.
Below are the main forecasts of the digital payments market in 2017. These forecasts are based on the current study, analysis and forecasting of the online payment market, as well as in conversations with the leaders of industry companies (according to the BI Intelligence version).
American companies that own mobile payment systems will dramatically expand their use cases in an attempt to accelerate market development
Approximately 25% of users who own mobile devices, still do not use mobile wallets in the US. This is bad news for companies like Apple Pay, Samsung Pay and Android Pay, and it is likely that these players will fight for new initiatives, trying to attract
It is likely that the addition of additional services and use cases will go beyond what we have already seen:
- Historically, mobile purses have been focused on making payments on credit or debit cards in a store (POS). But their capabilities have expanded: first payments in applications, and then offers of rewards and loyalty, and more recently - payments in the browser of the computer and mobile network. This probably helped mobile wallets attract users, since it is a convenient service, but it has not yet become a fully effective tool.
- Most likely we will go further. At a recent event, Apple Pay leader Jennifer Bailey said that their application hopes to cover "everything in the user's wallet." In addition, most likely there will be new forms of payment, such as tariffs for mass payments. This can help users form habits, since these payments are usually made on a relatively regular basis. This model successfully operates in the markets of Japan and the UK.
Mobile purse Alibaba Alipay will begin to focus on international users, as the company continues to build partnerships in the global payment ecosystem
Last year, Alipay entered the foreign markets to satisfy Chinese users while traveling abroad. This expansion includes partnering with terminal suppliers at POS and First Data and Verifone processors to go to the US, adding the first British partner to Zapper, and working with several POS providers to penetrate deeper into Europe.
However, by creating these partnerships, Alipay also began targeting foreign users, which it will continue to do in 2017, as it is looking for a new source of revenue to keep WeChat. According to The Wall Street Journal, Tencent, which owns the competing application, recorded a 20% share of mobile payments in 2015, compared to 11% in 2014, while Alipay's share dropped from 82% to 68%.
International markets will receive significant momentum in the field of digital payments through government intervention aimed at strengthening financial sectors or fighting corruption
Only last month a number of governments have achieved demonetization. India and Venezuela removed several banknotes from circulation, Australia is considering the cancellation of a 100-dollar bill. This can have a huge impact on the payment ecosystem in these countries. For understanding, in India, digital payments have grown more than 400% after demonetization. Sub-Saharan Africa is also ripe for a breakthrough, mainly due to regulatory reform, which has contributed to the growth of digital payments in the region. According to McKinsey & Company, mobile phones are also widely used in the region - they are already used by 66% of the adult population, and the figure is constantly growing.
This trend is often a prerequisite for the development of digital payments. This led to the fact that large payment companies, such as Visa and MasterCard, in 2016 directed efforts to seize part of this market. It is likely that in 2017 investments will continue, which will accelerate the use of digital payments among sellers, and consumers will receive more and more offers.
Card networks will become more convenient for trading in the face of increasing pressure from retailers and regulators
When a customer pays a credit or a debit card, sellers are forced to pay various fees to card networks and issuers. This issue was the focus of attention in 2016, when a number of large retail chains in the United States and Great Britain sued card networks because of their commissions, which, in their opinion, had an unjustified effect on their activities: from consumer price inflation to disability Convince consumers to use cards with PIN codes that are cheaper and safer. This has attracted the attention of regulators such as the Federal Reserve and the Federal Trade Commission (FTC) in the United States, as well as international bodies.
But after pressure from sellers and regulators, the card networks relaxed and began to change policy towards sellers. Competition in lending is constantly growing - it is likely that card networks are stepping up their activities in order to keep the market. One of the ways is likely to be the intention to establish closer relations with trading partners during 2017.
Credit card awards have reached their peak. The costs of banks and providers will start to exceed their benefits by the end of 2017
Last year, JPMorgan Chase CEO Jamie Dimon said that the new credit card company Sapphire Reserve could reduce the bank's profit by $ 200- $ 300 million in the fourth quarter of 2016, reports Bloomberg. Amex, which is the largest credit card issuer in terms of consumer spending, also forecasted that in 2016 marketing costs will grow by more than 10%, which is directly related to the reward. Not only do these bonuses become more expensive for financial institutions.
The recent increase in the Federal Government's interest rate may make loan extradition less profitable for these institutions. Additional costs are planned to be partially compensated for by reducing the growing cost of credit card fees, either by offering lesser remuneration or by tightening the conditions for obtaining a card.